The gap between the "haves"and "have nots"

[TARRAT]

Isn’t this something that is more a mathematical fact than a statement of good and evil.

Example:
A rich man is worth $100,000.
A poor man is worth $1,000.
The rich man increases his worth by 1% so he is now worth $101,000
The poor man increases his worth by 5% so he is now worth $1,500.
So even though the poor man had better increase in the percentage of his net worth the gap between the rich man and the poor man has increased.

This is a very simplistic example but it makes the point that I am after.

Measuring the gap between the “haves” and the “have nots” is really not much of a measure. Or at least a measure that only proves math and not the rise or decline of a society or economic system.

Just a thought.

 

[buffalo]

Isn’t this something that is more a mathematical fact than a statement of good and evil.

Example:
A rich man is worth $100,000.
A poor man is worth $1,000.
The rich man increases his worth by 1% so he is now worth $101,000
The poor man increases his worth by 5% so he is now worth $1,500.
So even though the poor man had better increase in the percentage of his net worth the gap between the rich man and the poor man has increased.

This is a very simplistic example but it makes the point that I am after.

Measuring the gap between the “haves” and the “have nots” is really not much of a measure. Or at least a measure that only proves math and not the rise or decline of a society or economic system.

Just a thought.

I agree, but those that want to advance that point exploit it. Another thing they do not mention - that the greater the number of people on government assistance the greater the number of low income, while the working people are moving forward.

 

[DaveBj]

snip

The poor man increases his worth by 5% so he is now worth $1,500.

snip

Not commenting on your topic, but your math is wrong. A 5% increase in worth would bring the poor man to $1050. Increasing his worth to $1500 would be a 50% increase. Either one illustrates your point. However, the rich man probably wouldn’t even notice the 1% increase, while the poor man would see the 50% increase as a major windfall.

 

[TARRAT]

Not commenting on your topic, but your math is wrong. A 5% increase in worth would bring the poor man to $1050. Increasing his worth to $1500 would be a 50% increase. Either one illustrates your point. However, the rich man probably wouldn’t even notice the 1% increase, while the poor man would see the 50% increase as a major windfall.

Can’t say now whether it was a typo or a math mistake.

 

[Usige]

Can’t say now whether it was a typo or a math mistake.

Always go for the typo. “Sorry that was supposed to be 50%”

I get where you are going. It might be better to look at wealth distribution over time. By wealth I mean not just income, but also assets (property, investments, etc.) It would show how wealth basically moves between different segments of society. A widening gap would show a continuous consolidation of wealth in the upper tiers.

That being said there is much to be said about looking at year over year percentage increases. As said before a 5% increase in wealth or income to a poor person would likely have a direct impact on their life, where as a 1% increase at the upper tiers is almost an academic exercise. Even if a 5% increase is a 20th of the 1% increase you showed above you’d need to look at how it effects the quality of life.

 

[Ridgerunner]

It’s interesting that the percentage of national income going to property (capital) and that to labor is almost always the same. It has varied almost not at all since 1929 when they first strated keeping records. That might mean nothing other than the fact that it takes a certain amount of capital to make labor productive, and capital’s contribution doesn’t vary a great deal.

But labor’s share is highest, and capital’s lowest at full employment. At high unemployment, both decline as an absolute number, but capital’s share is a bit higher than it is at full employment.

I am concerned that high unemployment seems to be in the process of becoming the “new normal”. That’s not good for capital or labor, either one. But since the Fed keeps printing cheap money to keep the economy from declining, and the government mandates
things that tend to suppress employment, it should be a surprise to no one that the ratio is skewed in favor of capital, at least somewhat.

Income is at the root of capital. If a person doesn’t inherit or win a lottery, his only initial source of wealth is his income. At a point, if he accumulates some of it, he can invest it and it becomes “capital”.

But right now, I don’t see broadly based income improving to speak of, if at all. Nor do I think it’s likely given the really awful labor participation rate we have in this country.

I am really concerned about what Obamacare is going to do in terms of unemployment, less ability to keep income and borrowing that tends to erode asset values. I do think this country will eventually get out of obamacare because I don’t think there will be much choice. But it’s going to be very painful.

 

[mikekle]

The real question is, what does God consider to be ‘rich’? In his eyes, a person in todays world that earns $20K a year may be a rich person, even though OUR society has the opposite opinion. It is pretty clear to me on issues like this, God and man rarely agree on the same thing, so Im betting alot of people are going to be in for a surprise when they come before God!

Here in the US it is common for most working people to have their own vehicle, it may be a cheaper, old car, but its still, their own vehicle, this alone may deem someone to be rich, since much of the rest of the world, this is unheard of, even for a entire household to have 1 car.

I was listening to a talk radio show, they were discussing poverty and they said 80% of people living in poverty have air conditioning, 92% have a stove to cook on, 98% have a freezer/refrigerator, 80% have a TV in the house, 95% have a microwave oven, 90% have cell phones and /or house phones as well!!! These are pretty shocking numbers. In many other countries these people would be rich. I think (at least in the US) poverty is not really understood and people have no idea what poverty even is.

It is pretty sad when our economy is in the shape it is, yet instead of people standing in line for apples to eat, they are standing in line to BUY the latest apple iphone, most with the $500. in cash in their pocket, yet many of them probably can not even afford their rent that month LOL.

 

[TARRAT]

Yes. I heard or read somewhere that the poorest people in the U.S. are among the 1% richest in the world. Before that I never really thought about it much but when you think about the poor people in Africa and India and how populous those regions are it, once again, kind of skews the math.

 

[mikekle]

Yes. I heard or read somewhere that the poorest people in the U.S. are among the 1% richest in the world. Before that I never really thought about it much but when you think about the poor people in Africa and India and how populous those regions are it, once again, kind of skews the math.

What I find sad is, those truly poor people in Africa, and other 3rd world countries, they are very modest, when interviewed, they rarely even ask for anything, they are proud and like to make things happen for themselves, however when ‘poor’ people from the US are interviewed, all they do is ask for help, usually from the Fed govt, they never stop talking about how ‘bad’ they have it.

I think many in the US have been become spoiled, even though they may not have a wallet full of cash, they dont realize they are rich, just for having a car to ride around in, a house in a safe area to live in, a big TV to sit and watch, access to cold drinks without alot of work, etc.

I think this kind of thing really upsets God.

 

[stinkcat_14]

What I find sad is, those truly poor people in Africa, and other 3rd world countries, they are very modest, when interviewed, they rarely even ask for anything,

Actually if you go to Africa you will find plenty of people willing to ask for things, especially if they think you are a rich foreigner.

 

[SamH]

Actually if you go to Africa you will find plenty of people willing to ask for things, especially if they think you are a rich foreigner.

Agreed.

Almost as bad as when I travelled to Colorado Springs and was swamped by panhandlers.

 

[J_Peterson]

Yes. I heard or read somewhere that the poorest people in the U.S. are among the 1% richest in the world. Before that I never really thought about it much but when you think about the poor people in Africa and India and how populous those regions are it, once again, kind of skews the math.

What is that based on? I see people in Boston that have nothing and would be dead without charity. Is there something less than nothing?

 

[TARRAT]

What is that based on? I see people in Boston that have nothing and would be dead without charity. Is there something less than nothing?

Well let’s see. What do people in large cities in the U.S. have that those in really indigant countries don’t have? There are homeless shelters, soup kitchens, public restrooms with sanitary facilities, public parks with refuse removal, bridges to stay under, heating grates to on, and people to panhandle from. Yes people to stay in the streets have many more options here than in indigant parts of the world. They have no water, no sanitary facilities, they live among their waste and disease.

Another point that is brought up by this post is: When there are extreme weather conditions in any of those major cities who have a large homeless population, why does the local news media go for interviews to the local homeless shelters. Where they are generally told by those gracious people who voluntarily work there, that they believe their ability to take care of all the people who will show up at that time will greatly tax their facilities. Now where are those people when the weather is not severe. I think that at least one possibility is that they are staying “under a bridge” or “on a heating grate”. In this great country they certainly have the right to stay wherever they want to, but choose not to go to homeless shelters and soup kitchens.

Not trying to be uncharitable but at least one point is that some people choose their lot even in this land of plenty.

God Bless

 

[manualman]

In my limited experience with the homeless in the USA, an awful lot are homeless due to mental illness and psychological inability to live in the confines of a typical homeless shelter. I don’t think it’s fair to say they “choose” to be homeless, but that they don’t perceive any more acceptable choice.

In any case, poverty is actually a relative thing. King Soloman had none of the luxuries present in most US Section 8 housing, yet I doubt he’d volunteer to trade places given the choice. Being on the bottom of the heap is innately depressing and degrading, regardless of how luxurious the heap is as a whole. Especially so in a culture as broken as ours where people judge one another by their material success.

 

[BillP]

Isn’t this something that is more a mathematical fact than a statement of good and evil.

Example:
A rich man is worth $100,000.
A poor man is worth $1,000.
The rich man increases his worth by 1% so he is now worth $101,000
The poor man increases his worth by 5% so he is now worth $1,500.
So even though the poor man had better increase in the percentage of his net worth the gap between the rich man and the poor man has increased.

This is a very simplistic example but it makes the point that I am after.

Measuring the gap between the “haves” and the “have nots” is really not much of a measure. Or at least a measure that only proves math and not the rise or decline of a society or economic system.

Just a thought.

Your logic is, I am afraid either specious or misinformed. The “gap” between “haves” and “have nots” is traditionally measured by their respective shares of the national income or wealth.

In your example, the total wealth starts at $101,000, with one man having 99% of it and the other man having 1%. After your adjustment, the total wealth is $102,500 but with one man now controlling 98.5% and the other getting 1.5%. The adjustment represents real (albeit small) progress and if it obtained in our system would be applauded by progressives.

Unfortunately, what we see is that the top 1% are capturing an ever increasing share of both income and wealth (not just in absolute dollars, but as an actual SHARE or ALL dollars of income). In 1977, the top 1% of Americans received 7.7% of ALL income, in 2013, the top 1% received more than 19%.

Guess who the extra 11+% came from?

 

[BillP]

It’s interesting that the percentage of national income going to property (capital) and that to labor is almost always the same. It has varied almost not at all since 1929 when they first strated keeping records.

This is so terribly, catastrophically, calamitously wrong that I had to address it.

Labor’s share of National Income has been steadily declining for quite a long time

The rising share of income going to financial assets also contributes to labor’s falling share. As illustrated in the following chart from the Federal Reserve Bank of St. Louis, that share has fallen 12 percentage points since its recent peak in early 2001 and even more from its historical level from the 1950s through the 1970s.

economix.blogs.nytimes.com/2013/06/11/financialization-as-a-cause-of-economic-malaise/?_r=0

clevelandfed.org/research/commentary/2012/2012-13.cfm

The entire “conservative” economic policy is predicated on promulgating untruths and misrepresentations such as the ones in this thread to dupe people into voting for policies that will harm them.

 

[manualman]

Unfortunately, what we see is that the top 1% are capturing an ever increasing share of both income and wealth (not just in absolute dollars, but as an actual SHARE or ALL dollars of income). In 1977, the top 1% of Americans received 7.7% of ALL income, in 2013, the top 1% received more than 19%.

Guess who the extra 11+% came from?

A valid viewpoint that runs aground at the above point. You haven’t given enough data to answer the question honesty! Your thinking suggests “zero sum game” worldview when economics is nothing of the sort. In order to evaluate the difference, you should be looking at the actual GDP in 1977 and compare it to that of 2013 in inflation adjusted dollars. The explosive economic growth that occurred in that time frame was largely based on technological advancements, yes? Without those tech advancements, there would BE no inflation adjusted growth in GDP per capita. So if the pie grows enormously in a certain pie period, is it “unjust” if those most directly participating in the growth sectors benefit?

A simplistic example might be Steve Jobs and Bill Gates. These two guys are clearly 0.001%-ers, so are they villains? Or did they actually EARN the enormous amounts of money they have buy revolutionizing the world and directly causing much more GDP growth than they actually personally gained as wealth. If I were to delete the personal computer from history, how much lower would today’s GDP be?

It does not demonstrate injustice if innovators and leaders create whole new economic engines and personally reap enormous profits from it. To demonstrate injustice, I think we need to look at the actual inflation adjusted income of regular middle class people in 1977 and today. I actually think you can make a more valid criticism of concentration of wealth from that perspective than you can pretending that every dollar one guy makes comes from another guy’s pocket.

To do that you have to show that the average accountant, auto repair tech, factory worker, plumber, engineer, doctor, beautician, janitor and teacher makes less today than then in inflation adjusted numbers. I’d actually like to know the outcome of such an analysis!

I do know that MY standard of living is a LOT higher than that of my parents when they were my age. I’m not sure how common it is for people to actually have a lower standard. They had a 950SF ranch, one car garage, a base model Hyundai Exel and base model Buick, one color TV, window AC and an Apple IIe computer. No cable TV, no cell phone, no ipad, no GPS, no CD/MP3s, no snowblower. I was 12 before I ever rode in an airplane.

My cars start when it’s zero outside and they last 175k miles. Heck, all my stuff is nicer. Yes, I’m financially stressed just like they were at my age. But I suspect most of us have a far more luxurious lifestyle today in absolute terms than our parents did at our age. Who cares if Bill Gates has a much nicer yacht than JP Morgan did?

 

[BillP]

A valid viewpoint that runs aground at the above point. You haven’t given enough data to answer the question honesty! Your thinking suggests “zero sum game” worldview when economics is nothing of the sort.

I’m afraid you’re wrong.

I specifically cited “share”, because they have to (by definition!) add up to 100%, which is, again, by definition, a “zero sum game”. One can ONLY increase one’s own share by taking it from someone else.

The fact that the pie is bigger is totally irrelevant.

The rest of your post is, similarly irrelevant to the matter being discussed.

Your contention that the bottom 90% (or 99%) should be content with an ever diminishing share of national income because their betters in the top 10% are allowing them a few extra crumbs is not only sad, but will eventually turn the US into a 3rd world oligarchy.

The fact that those who advance that idea, have found such a receptive mind for it is disturbing.

 

[manualman]

Let me see if I have this straight. You and I are both ditch diggers for a living. We make the same wage, digging away for $160/day. One day I have a thought: with hydraulic actuators and steel beams, I could invent a machine that could do this job 50 times faster!

I proceed to tinker, design, finance and produce the machine and open my own business and charge $500/day, but can dig 10 times as much ditch as a man. You still have work since hand digging can work around things in ways the machine can’t. But for plain ditches, the clients love my company since it actually costs less to get more.

Now you and I together generate $660/day of economic output. But I’m a dastardly, evil oligarch because the total earnings between us went from 50/50 to 76/24? You’re still doing what you’ve always done and are still making what you always did, but I’m evil because I’m making more money as a result of my new idea?

You really don’t think that comparisons should be based on inflation adjusted income rather than total GDP? You might actually find that even inflation adjusted income has declined in some lines of work. But until you look at it from that angle, I still say you’re peddling envy.

I actually agree with you that we have a serious danger of a permanent oligarchy in this country. But that danger isn’t innately from disparate incomes, but from a tax system that rewards investors (by definition people who already have money) over entrepreneurs and workers. Personally, my solution depends less on envy and seizure and more on justice in taxation. Income is income. Treat all sources as equivalent, apply a reasonable adjusting tax rate and keep it simple. That would go a long way towards discouraging oligarchy. Oligarchs do, after all, tend to get spoiled, lazy and unproductive after a few generations. Then they go broke and a meritocracy is restored.

 

[tabycat]

The real question is, what does God consider to be ‘rich’? In his eyes, a person in todays world that earns $20K a year may be a rich person, even though OUR society has the opposite opinion. It is pretty clear to me on issues like this, God and man rarely agree on the same thing, so Im betting alot of people are going to be in for a surprise when they come before God!

Here in the US it is common for most working people to have their own vehicle, it may be a cheaper, old car, but its still, their own vehicle, this alone may deem someone to be rich, since much of the rest of the world, this is unheard of, even for a entire household to have 1 car.

I was listening to a talk radio show, they were discussing poverty and they said 80% of people living in poverty have air conditioning, 92% have a stove to cook on, 98% have a freezer/refrigerator, 80% have a TV in the house, 95% have a microwave oven, 90% have cell phones and /or house phones as well!!! These are pretty shocking numbers. In many other countries these people would be rich. I think (at least in the US) poverty is not really understood and people have no idea what poverty even is.

It is pretty sad when our economy is in the shape it is, yet instead of people standing in line for apples to eat, they are standing in line to BUY the latest apple iphone, most with the $500. in cash in their pocket, yet many of them probably can not even afford their rent that month LOL.